NEW YORK (AP) -- Shares of Chinese search engine operator Baidu.com Inc. reached an all-time high Tuesday after a JPMorgan analyst initiated coverage of the stock with an "Overweight" rating, saying shares will rise as Internet use in China increases and the company gains market share.

In a client note, Dick Wei said Baidu shares should rise to $400 by the end of next year.

The company has brand recognition and a history of offering products its users want, he said, which has made it one of the most visited Web sites in China.

"We believe the continued traffic and market share gain demonstrate that management understands the Chinese users' needs," he said. "Over the next few years, we expect another 100 million people to use the internet in China."

Wei also praised the company's search technology, and said Baidu has a good relationship with the Chinese government.

*********Takeaway: This is actually a pretty conservative call; only saying that there will be a 33% rise by year end 2008 (15 months). Heck a good Chinese stock does that in 1 day. Baidu you loser stock! That said, I am sure the lemming... err investors... in Baidu.com think this $400 should hit by next week.

I like Baidu. I really do. Just not at this valuation. There is rich and pricey. And then there is rich and pricey. Forget earnings per share which are off the map; even the price to sales is 60. Folks. That is dot com valuations. Sorry, I will sit this one out on the sideline. Maybe at $240 where its price sales would only be.... oh nevermind. If Baidu.com is $400, Google (GOOG) should be $800. (yes even with its SLOWER growth and INABILITY to win the hearts and minds of 1.3 Billion Chinese) And this folks is how dot com valuations used to work... if overvalued as a fat hippo stock A was worth $XXX than not quite overvalued as a fat hippo stock B was certainly worth as much. And you can keep playing that game forever - until PE ratio 150 stock was cheap compared to PE ratio 180 stock. It's all relative....

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